A federal-state partnership health insurance exchange for Michigan is expected to be in place in October 2013, but the state's health plans, employers and individuals will find less flexibility than if the state had approved its own exchange, several experts told Crain's.
On Thursday, the Michigan House Health Policy Committee rejected in a 9-5 vote Senate Bill 693 that would have created a state-run exchange and used $9.8 million in federal funding to develop it.
An insurance exchange will allow individuals and employers with 100 or fewer workers to comparison shop among private insurance plans through a web-based portal. The federal government will subsidize premiums for people based on income.
Gov. Rick Snyder and House Speaker Jase Bolger, R-Marshall, had supported the bill, but conservative Republicans on the House health policy committee balked at implementing any portion of the Affordable Care Act, also known as ObamaCare.
"We don't have as much flexibility, but the core benefit of the partnership model allows the state Office of Financial and Insurance Regulation to do health plan management," said Steve Hilfinger, director of the Michigan Department of Licensing and Regulatory Affairs.
"OFIR will determine whether the health plans are qualified and eligible to participate in the exchange," he said. "It is an important way to keep control over our health insurance market."
Marianne Udow-Phillips, director of the Center for Healthcare Research and Transformation in Ann Arbor, said Michigan also will lose out on the ability to select local vendors to develop the information technology systems for the exchange.
"That is unfortunate. Health and Human Services will hire Medicare contractors they have historically used in a generic-type approach," Udow-Phillips said. "The states could have customized that to local needs."
Hilfinger said the federal government also will set fees that health plans and insurers must contribute to participate on the exchange and fund operations.
"Michigan would have controlled those fees through a nonprofit board, as the governor wished," Hilfinger said. "The nonprofit would have provided better market-based decision making and a leaner cost structure."
Hilfinger said it is also unclear now if the federal government will help fund state costs in 2015 under the partnership model for health plan management and consumer assistance.
"There would have been grant money to fund those operations under a state-run exchange," Hilfinger said. "The federal government now has to spell out whether they are going to provide ongoing support for that. It could come from user fees. We don't know."
Hilfinger said Michigan still could approve a state-run exchange sometime next year to be implemented in January 2015.
"The governor is amenable to that because the state would have better control," said Hilfinger, adding that he expects the federal government to certify Michigan's partnership approach early next year.
by Jay Greene
Crain's Detroit Business